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News/Business. Becky Quick, Joe Kernen, Andrew Ross Sorkin. Business news and talk as the trading day unfolds on Wall Street. New. (CC)

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Us 28, U.s. 22, Europe 19, Bill Ackman 12, China 11, Ron Johnson 11, Schwab 11, Mike Ullman 10, Oregon 9, Florida 9, Elan 8, S&p 6, Macy 6, John Taylor 5, Rochester 5, Ullman 5, Nike 5, Germany 5, Ackman 4, Jim Cramer 4,
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  CNBC    Squawk Box    News/Business. Becky Quick, Joe Kernen, Andrew Ross Sorkin.  
   Business news and talk as the trading day unfolds on Wall...  

    August 13, 2013
    6:00 - 9:01am EDT  

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sorkin and scott wapner in for joe who is still on vacation. the bulls are trying to bounce back today after the dow closed at a one-month low yesterday. the s&p fell for the fifth time in the last six sessions. u.s. equity futures this morning are indicated a little higher, check out right now, you'll seat dow futures up by 66 points. the s&p futures are just about 6 1/2 points above fair value. a lot of this is coming off what happened in japan overnight. we'll talk more about that in a moment. a number of key economic reports are expected today. at 7:30, the nfib survey of small business sentiment. an hour later, retail sales and import export prices. and finally at 10:00 a.m., business inventories. in global market news, stocks in japan rose after a media report suggested that the prime minister is considering a corporate tax cut to help offset the impact of the planned two-stage hike in the sales tax. that definitely helped up the nikkei, up by 2.5% at the end of the take. this morning, you see our
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futures picking up on this. jim cramer was tweeting if you're buying this because of what happened in japan, be careful, because he does not think the markets are correlated. watch out for it. also, news out of europe, a survey showing that german analysts and investor sentiment climbed more than expected in august. that news suggests that europe's largest economy is regaining momentum. we'll have more from our colleagues in london in a few minutes. >> in corporate news, yum sales in china sliding more than expected in july, down 13%. among the reasons, the heat, some analysts say the company's lack of cool drinkz and ice cream meant could nsumers looke elsewhere. the kfc parent is trying to bounce back from the dublg double impact of a food safety square and bird flu outbreak. a new director may be named as part of an effort to resolve the dispute with bill ackman.
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ackman's effort immediately remove interim ceo mike ullman would apparently be put on hold. >> we talked about this story. i don't get this part. >> i've been thinking about this. i've been thinking about the deal, if i was on the board, i would try to reach with ackman. which is i would say to ackman, here's the deal, we will put this other person on the board -- >> ackman is director, they're saying here is someone that ackman wants on the board? >> or someone in the retail business. >> somebody with experience. >> right. >> that he would be happy with. we say, fine, we'll put this fellow on the board. however, you have to sign on the dotted line that you will not speak ever to the public, do anything outside of the bounds of the role not just of what you think a board member is, but i would write rules and if you are to -- if you were to contractually somehow get kicked off the board. that's the structure of whatever transaction here i would be setting up with that. i don't know if it is possible. but i was thinking this -- last night, what i would do if i was
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a boardmember. i had a strange dream last night. >> what is interesting about this whole episode, i think, and was, you know, laid out in all of the letters, whether from ackman's side or from the jcpenney board side is that nowhere did the jcpenney board push back and say, no, mike ullman is going to be our long-term guy. they in their own letter -- >> he was only supposed to be there for six months or something. >> he is the interim guy. in their own statement, to ackman, after this whole thing started, even they say they're going to initiate a search for a new ceo, it is simply the time frame that ackman and others wanted, you know, 30 to 45 days where as the board wanted a more deliberate take their time kind of a search to find the right person. >> this is because of timing of the new ceo? >> i think so. i think everyone grew -- ackman grew fraus traustrated with the that the stock price was going
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down on a daily basis. when the board agreed to initiate a search for a ceo in his mind, i think they seemed to be dragging their feet a little longer than the market had been telling them, get off your you know whats and let's do this. >> here is my question as our activist expert at the table that you are, in some cases here. do you believe this situation has strengthened or weakened bill's hand in his ability to go after other companies? and the reason i raise this is in recent years, he has played in some cases, unless you're shorting the company, the nice ackman. he goes in, he says i'd love to be your friend, take me under the tent, i want to be on your board. right? and because people have been semiscared of ackman, they take him under the tent because they think that's the better course. after this little episode, do companies say, i can't have him on the board because i'm worried about what just happened or do they say, i'm actually now even
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more scared of him than i really need him on my board. >> boy, that's a really tough question. i don't know that -- i think ultimately each case will be judged individually, that the next position he takes of scale or he wants a place on the board, people may be a little bit wary because of the situation. will they be absolutely not -- >> but may be so nervous they may decide that's a better course too. i could see him cutting both ways but wasn't sure how -- maybe i was not thinking about it. >> i don't know. i honestly don't know. it will be a good case study that next time he tries to take a seat on the board and see what if any pushback there is. he's not trying to get a board seat at -- that's his latest position. so i don't know. >> okay. >> at the end of the day, he's going to get what he wants here. they're going to get a new ceo.
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they're going to get a new director with retail experience. >> just the timing. >> it is the way in which it all went down. >> right. it is the way in which it all went down and the question is, long-term, is this good or bad for the future of jcpenney. you look at the company, does this disruption in the end help it because they get the things he wanted in, they get the things sooner or does it hurt it because it raises questions with suppliers and customers. >> i think those questions are already out there. i can't imagine that this whole circumstance could help. if it -- maybe if it creates more of a sense of immediacy within jcpenney that, okay, if we don't do something quickly, we may not all be around this table a year from now. i don't know. >> you know, we're not going to know until we look back a year from now. hindsight of where the stock stands that the point. we'll see. >> yeah. >> all right, activist investor glen view capital management says a majority of shareholders in health management associates
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voted to oust the hospital chain's board. the members will be replaced with glen view's slate of directors, david faber first reported the news yesterday morning. the board changeover complicates hma's planned sale to community health. you want to touch on this too. one thing about jcpenney, a story out there yesterday that glen view and the soros fund were taking jcpenney's side because they both are shareholders. now, i reported later in the afternoon that according to a source close to glen view, it is a passive state, they're not choosing sides, and, c, there is only one side according to them, at least according to this person, to take. and that is that everybody agrees that jcpenney needs a new -- >> yeah. >> so it comes full circle as we end on this glen view. unrelated story. >> but related. >> we have other news -- >> the federal reserve
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yesterday. >> jcpenney not related to this story, the cftc now subpoenaing a number of major metal ware housing firms including glenc e glencore. the regulator wants documents and communications from the last three years. the cftc looking into allegations by users of metals that ware housing firms have made it more expensive for them to buy metal by restricting the flow of metal out of warehouses. the financial times reports goldman sachs and jpmorgan received subpoenas as part of the inquiry. bp is suing the u.s. government. the company wants an injunction that would lift an order by the epa that suspends the company from contracts to supply fuel and other services. that ban was imposed after bp pleaded guilty to manslaughter and other criminal charges related to the 2010 gulf oil spill. and feels like so long ago. now to see bp turn around and sue the government, i don't know how i feel about all this. >> let's look at the markets
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this morning. you see the futures again are indicated higher after losing ground once again yesterday for the markets. markets were down but slightly. bigger drops early in the morning and that smoothed out through the course of the day. the dow futures up by 70 points above fair value. oil prices up by almost a dollar to 107.05. this will not move oil prices today but a huge story on the wall street journal about how mexico is trying to overhaul the oil industry. this is a huge deal. this is the world's biggest remaining untapped oil reserves. they'll be opening them to private companies and setting the stage for a new energy boom, which is right here on our doorstep. also, look at the ten-year note this morning, see that right now, it is yielding 2.658%, so the yield continues to creep higher. the dollar today is down against the euro, trading at 133.06. up against the yen at 97.90. gold prices this morning are down just slightly, down by 1.70.
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right now, time for the gloek markets report. carolin roth is standing by in london. good morning. >> good morning to you, becky. we are modestly higher to the tune of .4%. we are off the session highs, though, look we're much higher before that. but we'll take those gains. we are higher for the fourth straight day. getting a little boost from the zew index out of germany. want to show you the markets one by one. germany one of the outperformers, up by .8%. strong earnings from utility company e.on in germany. cac 40 up by .3%. the ftse 100, after inflation numbers for the month of july, higher than forecast 2.8%, but that tells you that inflation is still cooling. quick check of the forex markets for you, sterling dollar got a little bit of a boost after the inflation number, but has come back down. currently cable sitting at 1.5457. euro dollar getting a lift after the zew index beat expectations.
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now it is just above that 1.33 handle. coming back just a tad. and dollar/yen, once again, the big mover in the currency markets. you talked about this report in the nikkei newspaper saying that prime minister shinzo abe may want to offset the rise in the consumption tax with a cut in corporate tax. now, guys, this is nothing new. this has been reported before, but still it is managing to lead the dollar/yen higher up by 1%. back over to you. >> thank you, carolin. we have another buzz story this morning. elon musk now unveiling plans for a $10 billion hyperloop transportation system. we talked about it in a preview yesterday. but here is what is going on here. the plan is aimed at cutting the travel time between san francisco and los angeles down to get this 30 minutes. the price would be less than an airline ticket, musk says, and he hopes that someone will develop the concept because he says he doesn't have the time. but he's now suggesting he might try to create a prototype of
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some sort. it will take him three to four years, he says. also suggesting that they don't have to actually buy new land, so part of the problems with most trains is you have to buy people's houses, this would run down the median of a highway. they would -- they would put it up in the air, down the median of a highway, a little tube, vacuum tube, but not fully a vacuum. i don't know how -- >> like a modern day mono rail. >> in a tube. i don't understand why you don't get g-forces on you or something if you're going -- >> i don't understand a lot of it. elon musk figured out some impossible to solve problems before. >> i think he's the steve jobs -- the next generation version of steve jobs. if not, i give him the einstein or something. black stone reportedly agreed to buy a majority stake in about 80 apartment complexes from the financing arm of general electric. that deal values the portfolio at $2.7 billion. the apartment buildings contain roughly 30,000 units and located
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in dallas, atlanta, other parts of texas and the southeast. a judge has thrown out race-based claims in a paula deen lawsuit. those claims were made by a former savanna restaurant manager. the lawsuit ended up causing the celebrity cook to lose a big slice of her empire. when we come back, attention airline passengers. why some say that higher fares could soon be in the cards. "squawk box" will be right back. peace of mind is important when you're running a successful business. so we provide it services you can rely on. with centurylink as your trusted it partner, you'll experience reliable uptime for the network and services you depend on. multi-layered security solutions keep your information safe, and secure.
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time for "the executive edge," a daily segment focused on giving business leaders a leg up. first up, ford ceo is brushing off china slowdown fears. he tells cnbc he is not overly concerned about a pull gaback i growth, stressing there is a tremendous market there. >> china is the largest automobile market in the world. so as you pointed out, it is with -- we're the fastest growing brand in china, bringing all of our one ford vehicles to the consumers in china. i think our best estimate now is that it will continue to expand in between that 6% to 8% range. >> i guess the big question is, can you have a slowdown in china is fine for a big company like ford who is the fastest growing truck and car company there, but still have things come true that others have talked about?
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i always wonder if you can have both sides be right in this debate, depending how you play in the market. >> it depends how steep the slowdown can be. you can't have a slowdown at the same time you're having problems in europe. if ford is going to have more optimism about what is taking place there, you don't want that to be offset by a sizable slowdown in china. >> the type of slowdown na chanos talks about the slowdown that includes a real estate bust, which therefore you think you can mean you can get a loan for a car, all those things you think would trickle. i don't know how you play it. >> when you start off with such a small piece of such a large pie, i guess you can see a slowdown and still see a company able to expand into a much broader part of the market, just from starting from small numbers and being able to expand to an incredibly huge population. i don't know how that all works out. but chanos is interesting, the
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caterpillar call he made back in delivering alpha, saying that you can see the -- all of these slowdowns affect mining, the minerals, and spread beyond that. big companies you may not think about as being big china plays. i guess i would have to sit down and think deeply through all of this, but i wonder if you can have chanos be right and still alan mulally be right too. >> do you know the most popular u.s. car brand in china? >> cadillac? >> buick. >> buick. i did know this. i forgot. yes. >> little factoid for the morning. >> to our next story, attention cfos and investors. the government is set to unveil new annual audit report rules today. the wall street journal reports the accounting industry will be forced to disclose more about its views on a company. regulators argue that investors need more information from auditors about things like whether a company's accounting is aggressive and what auditors think of the most important features of a company's finances. we're back to a position, guys,
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of feeling like there have been failures even when some of the big firms are accounting things. there are some complaining we haven't made any progress since 2001. >> dare i compare for a moment the accounting firms to the rating agencies. >> i was thinking the same thing. >> that's what's going on here. the company pays the rating agency or in this case the accounting firm, the accounting firm doesn't feel they can say or speak openly exactly about how they feel, they always preferred just doing the numbers. this new plan, rule, would force them to actually say how they really feel about the situation, which is going to put them in certain cases in quite a conflict with their client, which could be good for investors. >> great for investors. >> if they're truthful. may make it hard because saying what they really think is always a difficult thing when you know who is paying you. >> paying the bill. >> a tricky issue. there have been so many complaints about accounting, it is one of those issues that charlie munger comes back to
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continually and blames for a lot of the things that went wrong in the financial crisis. we'll see if we get stronger rules on this. those rules are set to be released today. could the looming merger of american airlines and us airways spell trouble for consumers. the wall street journal says if past mergers are an indication, fares could rise at some hub cities. this reduced competition doesn't always boost ticket price because industry experts say discount airlines can still police pricing. airfare wars and is that going away from consolidation? >> this is your topic, becky. you know that anecdotally, i think the statistics bear it out, the prices go up. everywhere i've been traveling recently, prices have gone up. >> that's good news for investor because the airlines are gotten killed over years of stupid pricing wars. >> the business models of the airlines have changed so much for the better if you're a
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stockholder. >> bill miller, jim cramer jumping back in and saying, yeah, they like the airlines again and that's something you never expected to have happen. the question is, from a consumer perspective, not just the rise in fares, but how you get from here to there, do these roots end up getting canceled? do you have to go through another hub city before you get somewhere? that's something i noticed with the united continental tie-up here. you can't get there directly. got to fly through chicago to get to that market. >> flying stinks for the most part, right? say what it is. >> what every consumer -- >> you need to buy shares of the airlines so you can hedge your -- if you're going to pay more for the ticket, maybe your stock price goes up. >> it stinks. we will continue to fly. when we come back, we have the live report from florida where a 50 foot sinkhole swallowed up a
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third of a resort near disney world. buying a piece of the farm without having to do the hard work of the farmer. first, as we head to a break, check out the national weather forecast. we have the weather channel's alex wallace here. alex, good morning. >> good morning, becky. not a great morning in the northeast. this slug of moisture moving toward the 95 corridor. quite a bit of steady rain to deal with. approaching the philadelphia area and getting pretty close to new york city. not going to make for a very fun morning commute. that is for sure. this is all thanks to a cold front coming in from the west. that front will press through today. showers and storms associated with it with the moisture coming in from the south. some storms could pack a punch. there is the risk for strong to even severe storms anywhere in the red from eastern north carolina all the way up to eastern parts of new england. a lot of lightning and potential for damaging winds with these storms. but the good news is behind this front, cooler fall-like air mass, that will be settling in
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for a good chunk of the upper midwest, northeast and parts of the south as we head through the midweek. more "squawk box" up after the break. my mantra?
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good morning. welcome to "squawk box" on cnbc. i'm andrew ross sorkin with becky quick. scott wapner is sitting in for joe kernen. 100 foot sinkhole has swallowed up a third of a resort outside of disney world. and diana olick joins us now from claremont, florida. good morning. >> good morning, andrew. the message here this morning from the developers, from the general manager of this homeowners area, is that they are open for business this morning and they have more than adequate insurance to cover all this. this despite the incredible scene you're seeing behind me. a 100 foot sinkhole that goes down about two stories, taking out this one building and the resort. this resort has time shares and just being a place for people to come visit for a week or so. we are at the height of the season out here right near orlando and near all the theme parks. what they're telling me is that this building is a total loss, but they're already talking about rebuilding and
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redeveloping more area. this is a huge area, one of 53 buildings in this entire resort area and they're saying it is just 3% of capacity. that's why the message from the general manager here this morning is, you know, keep coming down, we're still open. it is just one building. and they're relocating the folks here. thankfully no one was hurt. what is so interesting is when they talk about more development in this area they say, you know, we have permitting, we have prestripr restrictions in place and we do drilling. if drilling or that kind of checking was done, you have to wonder, five years, ten years, 15 years later, sink hoiholes develop over time. i want to show you an interesting graphic we put together from core logic which shows there are 19,280 known sinkholes in florida. you can probably add one to that given what is behind me. but the number of these in
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central and western florida, it is really amazing to see. and yet development continues here. but, again, they say this is where people want to come. this is a fact of nature. and they say they believe this area not prone to that many sinkholes and don't seem all that concerned about it happening in any of the other buildings, again, saying this is 3% of the capacity of this resort, and, again, that they're open for business. we'll be talking more to folks around here about what it takes to test for this kind of thing going forward throughout the day. it is an incredible site to see and amazing that nobody got hurt. >> they say they're open for business this is only 3% of the capacity of the resort, but how comfortable do people feel coming down, not knowing what exactly the situation is or staying in the place next door to the sinkhole? >> yeah, i mean, look, they relocated a lot of the folks in this building into other buildings in the resort. and from what i've seen, a lot of folks decided they are going to stay. and these are actually time shared, owned by a developer in
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st. louis. joe scott crown diversified. and what they say is they're actually homeowner associations here. they have the insurance for this area and they say this is just a fact of life in florida. i don't know if you go person to person if they're going to say, given what you see here, and what happened here and how amazing it was that everyone got out, how they feel about it, but this is over 19,000 sinkholes in florida and people continue to come here. >> are there people still there on the resort that you've seen since you've gotten there? it is very early in the morning but -- >> it is 6:00 in the morning. there are still people -- it is a very large resort and still people here. you see lights on, cars around. so it is not like everyone has evacuated the area. they did evacuate two buildings nearby and said they will determine whether or not they can reopen those in the coming days. this one is a total loss, but as you said, business is hurbl fus the rest of the area. >> diana, thank you. unbelievable story. also in 20 minutes, we should tell you we'll talk to
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dr. robert brinkman, the author of "florida sinkholes science and policy." >> florida's limestone, limestone actually is porous. it ends up developing holes that come that come through it and dissolves in water. over time, you can't have this, particularly when you build heavy structures on top of it. one thing if there is an orchard on top of it. another thing if you a building development on top of it. it can wear it down. >> a story last week that part of tiger woods' house down on jupiter island was sinking. they had to come in and stabilize. >> it is limestone, a porous rock, dissolves over time, particularly in acidic water when they go through decaying plants. yeah. whoa. we do have -- >> a little news. >> just hearing that bill ackman is resigning from the board of jcpenney. this is bill ackman, pershing square capital management, resigning from the board of
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jcpenney. jcpenney board is also reaffirming support for ceo mike ullman. the chairman. >> and electing a new member to the board, ronald tyso, is that how you pronounce it, elected to the board. >> okay. this changes the situation. ackman, we believe, still owns 18% of jcpenney. you can guess from his decision to step down from the board, to resign from the board this is going to get even more hostile. >> yeah. i wonder what he does with the 18% stake at this point. that becomes an interesting question. you don't want someone of that scale to be selling all of their shares. >> here is what ackman says, in this initial press release. jcpenney, during my time on the jcpenney board of directors i have always advocated for what i believed to be in the best interests of the company, its stock holders, employees and others a this time, i believe the addition of two new
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directors and my stepping down from the board is most constructive way forward for jcpenney and all other parties involved. what seems -- the negotiation seems to have been that they added -- put tyso on and he would go away. the company saying a retail industry executive who spent 16 years as vice chairman -- that's now macy's, he will join the board effective august 12th. in addition, the board saying he intends to name another highly qualified new director in the near future. this does change. >> the stock is up -- >> is this hostile situation or not. it sounds like maybe they negotiated this and it is -- they're okay with both of these sides? >> hostile, i suspect that -- i suspect ackman said i will get off the board if you put these two people in. i don't believe, by the way, either of these new positions are going to be -- neither of
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these board members are acting as approximaties for ackman. that's not what the suggestion is here. not that they're going to be on the board on his behalf. it looks like he's stepping down in reaction to or as part of the -- as part of a transaction, such that these two people get added to the board. >> still want to any what, if anything, this would do to a potential search for a -- the next ceo of jcpenney, if anything. i'm assuming the press release that jcpenney has put out makes no mention or does it? >> it does not. it reaffirms, however, the company's support for the ceo. the board reaffirming overwhelming support for -- this is important. chief executive officer ullman. it does not say interim chief executive. they also say they reaffirm the support for the chairman, both who worked tirelessly for the company, the important work is
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to stabilize the financial position, restoring confidence and express their deep appreciation for the company's associates, also known as workers. >> let's bring in dana telsy standing by and has more thoughts on this as well. we're just getting you on the phone. you're just hearing this news as we are. having watched what happened at jcpenney, is this a good development? >> the company needs stabilization. the key is getting through this back to school and christmas season in order to reinvigorate traffic, to bring people back in the stores, board room fights don't need to be played out on main driving sales should be the focus. anything that brings calm internally and externally is the right thing to do. >> what do you think about what jcpenney has in stores now. are they ready for the back to school season, will they be ready for the shopping season? >> i was just in chicago doing
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my shopping tour yesterday and they're ready for back to school, back to school signs are all over, traffic was a little bit better than we have seen there in the past. but the arizona jeans are out. and now it is getting the customers in the door. >> and just in terms of traffic, how does that match up with where jcpenney was a year ago and two years ago? >> a touch better than last year and two years ago better than what it is right now. keep in mind, overall mall traffic is still down around 1%. >> who is in the stores? is this the -- jcpenney customer of old or young people? who is shopping at this point? >> still not enough shoppers in the store. it is a mix. i think some of it is the shoppers of old and some is shoppers anew. it still needs more traffic in order to drive the sales. they're first getting in some older merchandise like st. john's bay, gets the older customer, and getting the families in with their kids for
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back to school for some of the newer products. what you need to do, private brands balance between private and national, make it an experience again. they're not yet there. >> there are a lot of people who are skeptical of being able to turn that around. what do you think about the prospects for the company? >> probably never be what it was. but you're starting from a different base. just getting it to a stabilization point where traffic overall was down 6% in the first quarter, down 17% in the fourth quarter, getting to flat would be a victory. >> $13 and change now. how would you -- what would you do with the stock? buy it? >> i think if you have to -- yes, if i have to buy it or sell it, i would not sell it. i would buy it. but it is a risky name, and the fact that tjx, macy's, they have all taken share, so this is not
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a risk-free name. >> while you were speaking with becky, i was e-mailing with someone very close to the board, we'll describe them as a source close to the board, suggesting that this negotiated settlement was actually not as negotiated as you might think. that the board had been discussing with bill ways for him to step down, apparently, all weekend. and that in fact the addition of tysoe had been in the works for quite some time, apparently not connected to ackman's decision to leave, but, in fact, the view inside the board was better to do it all at once, maybe for optics, maybe that's what happened here. they can say they're getting one board member while the other goes away. when you look at the different board members and look at whether ackman was a force for good, or not, or whether you think that tysoe will help, how do you think about that issue? >> overall, having retail
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experience is very important to putting the pieces back together again. i think definitely you have investors and activists that can be forces for good. but you need everyone to act in unity when you have a business like this which has been in such disarray. >> but, dana, if this eliminates the possibility of alan questrom coming back to jcpenney to be on the board in any capacity. there was that idea laid out in bill ackman's initial letter that alan questrom would come back to be chairman of the board, if he could support the selection of a new ceo, if that is totally off the table now, is that a net negative for jcpenney? >> i think certainly questrom has lots of history with jcpenney and knows a lot of what's happening. i don't think it is necessarily a net negative. i say let's see what the christmas season says. they had so much turmoil in
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2013. >> they already placed all their orders for christmas at this point. >> that's done. the stuff is going to be coming in the stores probably by early october. back to school season will be later along this year taking us through september. >> wouldn't you think at this point not only for back to school but the holiday season, given the turmoil in the marketplace, given the issue that this company has had, given the fact that retailers are already having to do significant markdowns to entice people, to get into the store, that they're going to be sacrificing price, sacrificing margin even more because they have to do anything they can to get people to come into the store? >> i think that's a given already. i think overall in the retail landscape i think that the vendors they need jcpenney too. not that many choices of customers where you can go. so getting through this next three months or back half of the year is the key to determining what the plan will be going forward. >> all right, dana, thank you very much for joining us and particularly for joining us so quickly on breaking news.
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if you've been watching, the shares of jcpenney popped initially on the news, now they're up about 8 cents from where they closed yesterday. this has been a roller coaster ride and this has been something to watch just over the last week or two in particular. we'll continue to have update as we get more information on this. again, bill ackman has resigned from the board of jcpenney. jcpenney is going to be putting a new candidate on the board, they're adding the position for ron tysoe, who was with fed rated department stores for years. that is the precursor to what is today macy's. america's farming industry going through a major transition and that could open up bigger opportunities for individuals to invest in farm land. here now to tell us about the risks and rewards about farm land investing is john taylor, at u.s. trust. thank you for coming in today. >> thank you for having me. >> we should set the stage a little bit for why we're at this position. why you might need investors to
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come in to what used to be family farms. a lot more expensive to be a family farmer and have to be able to have a much bigger land parcel, correct? >> that's right. if you look at the most recent usda report, based on the census they did in 2007, you have farmers who are 65 and older and another 32% 55 and 65, so you kind of add it all up. >> 65% of the farmers. >> 65% of farmers are 5 ye5 yea and older. that's in transition over the next 10, 15 years. you need the next generation of america's farmers on the land. >> is it tougher to get younger people these days to do this? >> in a lot of ways, kids went off to college and they may have gone into other careers. now when they come back, the farming is an industry change too. the technology caught up. so as opposed to when i was grow up, i mean you had all this equipment. today, you have tractors with an board satellite and gps, maps
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that can be preloaded. tractors are more expensive combines. 36 row, 48 row planters in some cases. so the scale changed. it went up dramatically. >> which means a farmer can individually farm a much larger plot. but an investment to get that equipment. >> millions of dollars in investment easily on the equipment. as you look at that, what you're going to see now, you see the younger farmers that are coming in, a lot more technology, you know, have a lot more technology in their back ground, more savvy on that. a lot of them have college degrees or some college -- in the background. it moved from that trade to a profession. and what they see is now in order to farm its scale, the old model of owning all the land or 80% and only leasing 20% probably flips going forward right. so they're going to own maybe 20% of the land and lease 80%. so they can continue to farm its
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scale. >> how is access to credit for farmers? when you talk about the tremendous expense that it is to buy a tractor, a combine, or whatever we're talking about, can farmers get credit? >> great question, scott. they can. if you look at the debt on farm balance sheet, you look at what the kansas city fed and others have said, when the question about bubbling land prices, they said that was the difference now versus the 80s. you don't have farmers overextended. they have the ability to get credit. but they haven't blown up their balance sheet. what you see now is the farmers are very intelligent. they remember those times. you can buy land or buy equipment, very hard to lever up and buy both for the new ones, the people that have it that are the aging farmers, that also represents the significant part of their wealth. of their estate. at some point in time, they may have to monetize that in order to be able to retire. and transition that to the new farmer coming in. >> i'm fascinated by the whole
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idea. i apologize for the breaking news but we would love to have you back again. still to come on "squawk box," from one john taylor to another, at the top of the hour, the man behind fx concepts. and more on the breaking news of the morning, bill ackman resigning from the board of jcpenney, shares rising in the premarket, up 8 cents now. a visit from the prophet, marcus lemonis is back at it again, spending his money to save dying businesses. we'll ask him what he thinks about the drama at jcpenney. marcus, hello. john, thank you, again. [ kitt ] you know what's impressive? a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪
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welcome back. we have big breaking news this morning. jcpenney announcing that bill ackman resign from the retailers board. we have marcus lemonis here, he
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knows all about turning around failed businesses. the most of cnbc's primetime show "the profit." i want to talk about jcpenney, if this is a broken company if you look at a decision like this by the board for ackman to step down what does it mean? >> it means they're starting to get focused on getting back to basics. this company got away from its competency, not only on the marketing side, but particularly on the merchandising side. i visited the store a year ago and couldn't understand what it was. it just -- they have an identity crisis. >> how fixable is this situation given the backdrop of bill ackman coming off the board. there will be a lot of match nations over the next several weeks if not longer. this may quiet things down a little bit, but i also imagine they may get louder. i was on the phone with somebody close to the board who said this gives everybody freedom and i assume what freedom mean, if bill wants to sell his shares or throw darts, he can now do that more openly or more easily than
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he did before. at the same time, it gives the board freedom to at least have a sort of closed community where at least they can trust each other, which is another big piece of this. >> without lighting anything on fire, i think people are spending too much time talking about the board, and not enough about i think people are spending time talking about the board, not the management team. the management team has to be right, whether it's the leader, having a permanent ceo, whether they know someone in the ranks and field they can count on. that's the model. we are spending time talking about board members, not who the manager is. >> they obviously had johnson, they have people in the ranks loyal to him going through it, is that the right choice to bring him in, would you keep him as a replace him? >> you have to respect a company that the ranks respect the leader. at this point i think it needs a fresh look, whether from the
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outside or inside, it's to stabilize things. it's not why you the ceo. what does the management look below that? what's the merchandiseing team and marketing team look like, bring in a dream team. that's what the company needs. >> what is so interesting about the most recent nonsense that's taken place for lack of a better, smarter word, they recently bring in a head of marketing, right, who had no retail experience whatsoever, who was from a food company. so even amidst all the turmoil, right, as the stock is going to pot, everybody is wondering about the future of this company, they continue to make these missteps, to your point, it's about bringing in the other people the management team. >> how difficult is that to do about a company that's implodeing? >> if you are going to bring if a senior executive like the head of marketing of a business that needs to be better marketed and you don't have somebody with
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retail experience, hello! >> yeah, i think the trouble we keep having, though, we keep saying they, it's the board. what the company nodes to do is get a tough ceo, man or woman, who will tell the board to get out of the way for a while, let me bring in my team. i don't want the board hiring my players. >> you get the new ceo. they pick. >> it's got to be a ceo that says get out of my way. >> you got to get right guys, ron johnson said get out of my way for a year, which is the problem. >> which is why the car crashed. but it's all about people. all about people. >> thank you for being here. we want to let everybody know, a new episode of "the profit" it is at 10:00 eastern time and pacific. still to come on "squawk box," management guru jeff sonenfield sounds off on the situation at j.c. pen fi.
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penney.
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>> still to come, we'll talk to analysts and john taylorment we have fortunes sounding off as well. we'll talk about the future of blackberry as the company continues to look at its options. "squawk box" will be right back. s golden opportunity sales event and choose from one of five lexus hybrids
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. >> pershing square bill ackman resigns from j.c. penney. we have jeff sonenfield and on the set for the remainder of the program, andy sewer. jeff, we got you on the phone, you had some thoughts to this point on what's happening at j.c. penney, why don't you tell us what you think of this latest
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development. >> thanks. this is really great news. i think the "wall street journal," unfortunately, their legal adviser, some information wasn't accurate as people thought, that there was no prash against ackman for possibly a violation of his legal duties on the board member as a duty of loyalty. they could face litigation and certainly, there's a huge amount of pressure on ackman for violating confidential strategic staffing issues. so he ned to leave. they kind of destroyed shareholder value and violated the breach of trust on the board, bringing in ron tyso, there is a very constructive history as competitors in the macy's federated battles of the past back when mike was ceo. federated was coming after them, tysoe was ceo, vice chairman and
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things. they i think worked very effectively together in their past. i there is some misconceptions, scott, no offense, i think people misconstruing as ackman likes for the misconstrue with debra berman's role coming in, in marketing. she's not the o or chief merchant, she is come income with backgrounds. she knows advertising. she, therefore, campaigns, she has the exact appropriate backgrounds. you request look at people like steve jobs, rico, the plainest marketers in the world, they never were in the marketing fung per se. >> surely, you are not putting her in the same boat with them, jeff? come on? >> mike holloman started out as a career salesman. people's careers twists and turns, what deb berman is doing, she has this skill set for the image advertising of a major enterprise. that's the background she has. that's what she is going into. and i think questrom is
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ridiculous. mike had this company the share value of this company was four times what it is now under mike's frame. under allen questrom, it was half, for people to continually floating that name are one person, that's bill ackman. >> come on, jeff. >> he is left with this term -- >> i know you are a fan of ullman's, he, himself, questrom was on this network saying that he wanted to come back under the right circumstances to try and right the ship. >> why would they ever want him back, todd? i'm not trying to market j.c. pen fibefore, 3.5 years, he left early. he left federated early. he has been caught up in lawsuits. neiman marcus, he sued them. >> when bill ackman took his position and he brought if ron johnson and replaced mike
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ullman, the board agreed to replace meek ullman at that point. i don't remember back to exactly what the state of j.c. penney's business was. i can venture to guess when ackman took his stake, the business wasn't going all that great under the last years of mike ullman. >> in the auto industry the housing industry, we are going through a tremendous financial collapse at that time. >> jeff, let's just take one step back. our sources this morning, beyond this press release, are suggesting that we're going to be hearing through an ak what deal was reached with ackman and i don't want to presuppose what we're going to hear but i will, which is that this is going to give both sides enormous amount of freedom, including ackman, potentially now to share his shares. >> he can sell his shares, he crashes his own. >> understood. if he begins to sell his shares or potentially, by the way the company decides to buy back some of his shares, which could also happen, what does that ultimately mean for how this
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company is going to be viewed? >> i think it's far more attractive for bringing from a successor to mike, because you now have a far more stable supportive board. this is a board that's all on the same side, with the exception of one guy who just left, who is subject to his frat boy temper tantrums. that's not amenable to good governance, you can have plenty of debates and disputes within the board room, that you notice will go back to doing that. here we are, they told you seconds away from the back-to-school crush, it's very sensitive time for a reseller. >> andy is here on set, what do you think about this situation is. >> first of all, i'm concerned ackman didn't reseen on this network t. drama is basically his m-o. really, we forget how troubled this company is, how saturated this market is. and, you know, not only are people going to k-mart and sears and walmart, they're going to
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bed, bath and beyond, they're going to urban outfitters, they're going to ba nan fa republic, trying to get this ship right is going to be an incredible job, incredibly difficult job. >> although, macy's has do you know good job under terry lundgren. >> it's all about blocking, tackling, and stability. they've done neither of that over the past three, five years now. so they've got to get back to it. in 24 hours, this will start to you know, abide. they've got to get back to merchandising, buying, selling, getting their stores right. >> here's a complicated thing for bill ackman, the more i am thinking about this. she holding on to a loss on this stock. so for him to sell now would be a bit of a problem. >> so he's got to put his faith in mike. >> in mike and a board that he's no longer on. it creates all sorts of complicated issues, in terms of how even as an investor. then, what do you say to your lps, your limited partners who invested with you.
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you are for the longer on the board. >> he has limited partners that know the situation as pulling out, george tsoros have lost faith with bill ackman, they are puting their money districtly into jcp. >> i wonder what it means for other members of the board, like steve roth, for example, who many believe got into jc penney as a result of bill ackman. i wonder if, you know, has he's not thinking ought his future on the board, what all of that means. i don't know. jeff, i mean, what happens if you've got now more than ackman leaving the board? what happens if you have a guy like roth, who leaves next? >> i think to be clear, rob parted ways with ackman far back. i think he realized before anyone, he went quite public about what a disappointment ron johnson, what ron johnson is a fine human being, quest rom is a
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fine retailer for someone else, not here. they probably feel they made a mistake here and with toys 'r' us, you know, these brilliant people, richer and smarter than we are, can make some bad mistakes. i'm sure stephen roth wished they hasn't gone into this. >> jeff, let me ask you about bill ackman, he relies in part on the credibility of his reputation to make his case, to get on boards, to pursue proxy contests, to create tha-- owe c change at companies. i can see this cutting both ways, part of me says the board says i don't want him on the board. they probably never wanted him on the board. now they look at the jcp situation, they say, i don't want a guy on the board that will mouth off and talk publicly. >> probably more leverage. >> he is such a wildcard. i really have to put him under
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the tent now. >> i agree, he'd be too hot to touch. i don't think any board would want this guy, not only the public volatility, just looking at how tempermental he was about not being allowed to judge and review the debra berman hire. let's put deborah berman in perspective, it's important to the get this right, she is not in senior leadership. >> this is not -- this is not -- >> jeff, we got you. this is not about her. this is not about her. >> no, ackman was using her in his letters of excuse about not being coupled. >> he mentioned the fact that he read about the hiring in a press release. that's in the way that he mentioned it as i think trying to layout the case that he as a board member, there were certain people on the board who were making decisions without him. >> you know, every sunday morning, he puts out a blog of
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what's on his mine, what his decisions r. i think, you know, that ackman was extremely well briefed, but he doesn't get the chance to micromanage and call the shots. 50 people knee deep in management. >> you know what, at the end of the day, though, they bring in ron johnson the reason they failed was not bill ackman, it was ron johnson, he was a commuter ceo who didn't know how to do the job that he was hired to do. >> but he was heavily supported by ackman. >> he was heavily supported by ackman, at the end of the day, he was the guy in the office, he was commuting coast-to-coast, right, jeff? >> yeah, he should have been there. he should have made more of a commitment, let the opportunity go. it's really a shame. he, obviously, wasn't the right guy for the apple stores either, as people will tell you. he was the guy for the trade shows to talk about what apple was doing t. guys doing it were mickey dressler and steve jobs. they were running the apple stores. >> i think we can lay blame at both of their feet. why don't we leave it there for
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now. thank you for your perspective, it's a fascinating story. we are all trying to make sense of it. it's a crazy one, which is why you probably have some comments about the discussion this morning. questions, perhaps, about anything you see here on "squawk." send us an e-mail. you can follow us on twitter. and up next, it was once called crackberry bus of its addiction. now the struggling smartphone maker looking at all strategic options to save that company. we talk about what it means for blackberry users next. check out our yahoo logo update of the morning. it's a little better than yesterday, don't you think? >> it is better. >> "squawk" is backs after a break. n opportunity sales event and experience the connectivity of the available lexus enform, including the es and rx. ♪ this is the pursuit of perfection. ♪ a quarter million tweeters is beare tweeting.
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. >> welcome back, everybody, let's look at the futures. we are seeing green arrows. a reversal, by the end of the day, the markets barely budged. this morning, you see the dow futures are up by 56 points. ium sales in coin slooit sliding more than expected in july, down about 13%, among the reason, the heat wave, some analysts say the company's lack of cool drinks an ice cream meant a consumers looked elsewhere. the pampbt is trying to bounce back from the double impact of a food safety scare and a bird flu outbreak there. we have key economic numbers
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set to be released this morning. import prices are coming at 8:30 eastern time. >> we want to break in with more news over the dmeshl break. we d-- over the commercial brea. we had speculated whether a deal had been made, whether ackman was given anything in exchange for stepping down. he was not. there was a question of whether he might then decide to sell his shares, given the new freedom he has. ultimately, he will be able sell his shares. given the fact he is on the board and has had access to "inside information." sources say he still will be bound by his duties as a director for some period of time, that will depend in part on counsel and advice from his own lawyers. so for the next several months, likely will not be able to sell his shares on the assumption he has "inside information" and, therefore, can't sell his
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shares. >> it will be his lawyers that will guide him? >> it will be up to bill ackman's lawyers, not j.c. penney's lawyers. >> under water. >> he wouldn't want to sell now, anyway, other than to make a statement. >> to the extent that people were anxious, nervous, the are the of stepping down, because he has knowledge of "inside information" about the company's plan, at least currently, he won't be able to sell. the question is going to be, when can he sell? is it a three-month period, a six-month period? definitely not in the next several months. >> but there are a lot of dominos here that will fall in a certain direction. perry capital came out last week in support of bill ackman. they have what like a 7%, 7-plus percent stake? what did they do? they supported ackman in this whole battle. they wanted a new ceo to be put in. they would be supportive, they said, of, i mean, they threw a
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name out there at the time as well, what do they do? >> they not bound by the same agreements. >> i'm sure they're not. maybe they throw in the towel and get rid of their stake, who knows? >> a crazy story, kind of fun. >> all right. we will talk more about this coming up in a bit. in the meantime, blackberry exploring all options to save the struggling smartphone company. joining us to talk about it is david garrity. david, yesterday, we heard blackberry is exploring its options, i guess the question is, are there any buyers? >> well the question is going to be, if we look at blackberry's business, you can find a number of buyers, one thing that's happening is the shades of a technology company which is nortel. they went into a significant bankruptcy. the one thing that came out was the value that was found in its patent portfolio. one could argue looking at blackberry, yes, we could get
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support from canadian investors. we saw their largest shareholder resign from the board yesterday. he owns 10% of the company. we seen interest coming from canadian pension funds, one would arc you, though, looking at blackberry, they have to look at other buyers and the landscape has changed over the last decade because we have companies that hold patent portfolios such as vhc ticker symbol with a market cap over a billion dollars who might be interested coming in and trying to maximize the value of that patent portfolio. now the threat of vhc coming in, given the fact they have been an active litigator, might actually bring some other technologies off the side line the one most qualified but still conflicted at the same time is microsoft. >> with microsoft in that position, david, when you talk about this from what the shareholders will be looking at. is blackberry going to exist? or are my blackberry devices
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going to exist a year from now in. >> if canadian sentiment holds true, they will have some way of surviving going forward. the canadians aren't going as to see this thing go down. from that standpoint, if i was a consumer, i would say, fine, blackberry will continue to be in business. the u.s. department of defense approved blackberry as a possibly device management system software provider, i'm going to be comfortable with the fact the blackberry will exist. from the consumer standpoint, the argument is am i going to be happy with the user spoorns i have on the blackberry 10 devices? am i going to be happy if i don't have the same number of apps on an apple device or android device? >> if i'm a shareholder? >> the question is what is going to be left on the table, do we really see much upside from where we are right now. some are out there saying maybe on a buyout scenario, maybe $15, that's very questionable. >> david, you talk about buying
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the company for patents. i understand at google they bought motorola, not such a happy one, necessarily. you look at the deal between nokia and microsoft, not such a happy one. why would we believe there would be a deal that would work out well? >> well, from the standpoint, what i proposed sheer a structure where we are seeing a number of different parties that are coming in, obviously, the discussion about the patent portfolio, whether it would be a separate company, with i is really more focused around trying to maximize the value of a patent portfolio such as a birdnecks or as a result we will see other technology companies come in. granted, patent portfolios are basically playing cards at a table where you can try and get royalty income coming in. the issue from microsoft, obviously, they're conflicted. we said they have enough other issues, they do have their on activist shareholder in place. i would say, microsoft as a company the reason they got nokia was really more a seller
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of windows, not necessarily the devices. >> thank you very much, david. >> thank you. coming up next, traveling 700 miles per hour, that's elan music u muck's next big dream, can the hyper loop become a reality? we will discuss that. men in then an update from florida where a sink hole swallowed half of a resort 10 miles outside of disney. what it means for the snowbird state and the snowbirds that flock there in the winter. "squawk box" is coming back after this short break. a-a-a. f-f-f-f-f-f-f. lac-lac-lac. he's an actor who's known for his voice. but his accident took that away. thankfully, he's got aflac. they're gonna give him cash to help pay his bills so he can just focus on getting better. we're taking it one day at a time.
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musk says he was up all night working on a design before he released it. this is elan musk. so we are, nbc's tom costello has more. >> what if getting from point a to point b no longer included trains, planes or automobiles. think the jet zorns, not jets. one of the world's most visionary entrepreneurs says it's no longer science fiction. >> it's concord and an air hockey table. >> l.a. to san francisco in just 30 minutes. it may sound crazy, consider elan musk's track record. the billionaire who founded paypal, was the first to dock with a space station. he has hyper loop passengers on a transportation system inside friction tuesday, similar to the
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ones used by bank tellers, passengers will travel up to 700 miles per hour. meanwhile, a california company called et3 has been working on similar technology for years. >> if there is a concerted effort to do it, that route can be built in a year or two. >> even if it works, critics say clearing the regulatory hurdles makes it impossible, at least in the near term. on the other hand, this is elan musk we are talking about the inspeculation for the ironman's tony stark character. the ironman's suits sits on the xais spacex factory store. >> can you save the world, save the country? >> i'll do my best. musk says he doesn't have time, he is hoping others will make his dream become a reality. >> all right. some interesting questions have been raised about this, such as,
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do you get drink service for the entire time? >> i don't understand how you can't feel the g forces. before there was flight the wright brothers. have you heard of this crazy idea? everyone is saying, no, it is not going to work. maybe a few years from now, it will start to get developed. you don't know. >>. >> this is under the english channel. it was an unbelievable idea. they went through it. lost billions of dollars on this. >> it's a great success. >> they eventually fixed it out. >> elan mufblg says he's not the one that will build it. >> amazing. >> a prototype or something. >> when we come back. what small businesses are saying about the state of the economy, plus, could a chilly fall season
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help retail stocks get hot? we will be looking at the sector and what investors can expect. stick around for that and a lot more. .
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. >> welcome back. who else but steve liesman. >> you need a sharp men sill to get the addition to the small business. that's up to 0.6. not even a whole point, folks, up to an unremarkable 94.1. there is one somewhat unremarkable number. you can recall the details here. the net percentage of owners they say will add jobs is 9%. that's up 2 points. what's good about that is even though it's a low number, it's one of the higher numbers we've had since the recession in 2008. you can see, the other details
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there. those expecting easier credit conditions, that fell, planning cpap exunchanged. that's up to expecting the economy to improve. is down two points. who better to explain all this, than the mind of the small business owner, chief economist for national federation of independent business. bill, on our remarkable 91.1, you would expect triple digit numbers, not with decimal points? >> absolutely, steve, we should be looking at numbers around 103, 4, 5, when you have an economy taking off, that obviously is not taking off, we're just not going anywhere. if you go to the start of the recession, which would be december of '07, january '08, you aring looking at about the same number. that's after the index fem for a year, telling us we were going into a recession. so, we have come a half a point, maybe, closer to that number.
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that's it. >> i had to dig to find something to make your, the time of your survey be true, which is the small business optimism index. that's job creation plans. does that give you hope? it's the second best number we've had. there is the optimism index. you see that flattening at a level far below the normal level for expansions. when i look at job creation plan, any reason they're inside that number? >> i think there is, steve, if you look at the job creation numbers, you will see 9 is now taking us back into normal territory from our 40-year history. so that's good to see it move up. of course the jobs, the hard to fill jobs opening number gave us another point. which suggested a downward pressure. worked out well. we are happy to see that. we are concerned about is the jobs. maybe we will start seeing more of them. the question will be like -- >> can you jump from these numbers here to a monthly
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payroll gain? >> well, you know, i would say, probably closer to 200,000 based on our recent history. the problem is, of course, will they be full time jobs or part time jobs? you look at those june number, remember 360 part time, 240 full time lost. that's like 3 for 2 match at the macro level. we want full-time jobs. >> bill, quickly, why is capital spending flattening out here? this is another time in the cycle where you would expect the company should be deploying their capital for new equipment. we see it flattening out. is there a particular reason for that? >> i think you nailed it earlier. you pointed out, the prospects six months are deteriorated. the owners don't see the economy doing well. you look at the rising health care costs, uncertainty by the economy, energy costs,
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uncertainty about economic policy and the cost of regulation or red tape. none of those things have gotten betterment so i'm not surprised the index didn't go anywherement i'm not surprised they're not willing really to bet their money on that kind of an uncertain future. >> bill, thanks for joining us today. chief economist for the national federation of independent business. he keeps coming back and the numbers keep not changing. i don't know what to do about it. >> steve, thank you. we will talk to you later, too. on set, sharing the thoughts on the economy an more the managing editor of "fortune" imagination and john taylor the chairman and ceo. it has been a little conundrum, i can't physical out why the dollar is not porping performing better, the other central banks are not in that position. water going on? >> it's true. one of the things is that the fed keeps backing away from its tightenning or whatever and
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saying this is not really a big deal. maybe we're beginning to believe it. if you look at europe, it's getting better. will is capital inflow, the stockmarkets are undervalued compared to the u.s. a lot of things going on that are more positive in europe than before. >> is this just a case of not believeing the fed, though, if the fed does end up cutting quantitative eadsing, dialing it back in september, are all bets off at that point? >> i think there will be some changes. i don't think that what we have in the world is what we think we have. i mean, i think that the dollar rates will go higher and that basically the dollar will get chased up. probably not this quarter. more likely next. >> you know, i think what's happening with the dollar is an exam of how random currency values will be. if are you in a vacuum and you said, will this create a
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stronger or a weaker dollar? no matter when the fed does it, it is definitely in the process of reducing the amount. u.s. exports have been extremely strong. economic performance much stronger than other places mentioned by john. also the deficit coming down, all four of those things, which suggest a stronger dollar. alan greenspan said famously, i would say, that there are no factors that tell you about the value of a currency that are better than the flip of a coin. currency values over a short-term period, becky, can be random. if i have to make a bet, i would say the dollar should strengthen because of those four factors. >> john, how do you make a living? >> it's a bear, what you said is very, very true, that's why, you know, we are quantitative technical, we depend almost entirely upon computers, no matter how many times i come and open my mouth and say things, it's the computer that tells us what to do. >> on the margin, there are some signs in europe, you know the
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signs are that the growing economy is contracting a little bit less. >> it sounds like four-and-a-half seconds. >> still 4.6% it's contracting by a quarter. >> but that's better than anticipated. so that adds to the pressure against the dollar. >> we don't care about greece anymore. it doesn't exist. so, i mean, but nevertheless, you request look at unemployment in spain and say, well, it's gotten a little bit better. now, there are only 59%. >> that's the story. >> i can tell you, becky, in a room full of bankers last 84, every one of them said the you're row would weaken and weaken substantially against the dollar. it did not happen. these are the -- i don't know, if i was going to put my money with the guys. it says about them. >> i put my money with john. >> mooem people should know where the currency is going to go, these guys were looking at 120. it never happened. now, there is a question as to whether or not draghi should
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move to make that happen. that's a different story. should he use verbal intervention to weaken that currency, would that be a better policy for the euro? that's a different story. >> i believe if that strongly that draghi is making a mistake. but the thing is, you can be very cynical and say the ecb is located in frankfort. >> right. >> they are absolutely. they go to lunch with german burgers. they hang around germany. so theying a like they're german. >> steve, thank you, john and andy are on set with us. >> up next, the business of nascar the company's facelift at daytona. "squawk" will be right back. it's just her way. but your erectile dysfunction - that could be a question of blood flow. .
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. >> welcome back to "squawk box." i just got off the telephone with him in an exclusive interview. we spoke to him about why he stepped down from the board, why he raised these issues publicly. he said, quote, i elevated a bunch of issues critically important. we came to an agreement on ron tysoe. he will be joining the board. he says the board will now function more effectively
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without the noise him he continued to say, i'm confident what he did would focus the bird on all the right things and on the issue of whether he's going to sell his shares, he said, if i wanted to sell, i could have sold all along during the quarterly window. so as a board member, because you have "inside information," there are windows in which you can sell. he will still. >> he said he didn't sell any? >> he did not. he will still, though, have to be. we talked about this before. because he has "inside information," he is like a board member today and will have to wait potentially for the next window, at some point, depending on the strategy of the company, though, he may be able to sell. he says he has confidence in this company and she on the right path. he believes making the conversations public, he has helped put the company on the right path. >> he still owns 18%. >> however, here's the important part, his basis is $25 per share. it is not clear he has any ambition to sell these shares at a low price.
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one other thing, he quoted warren buffet. warren buffet had a letter he wrote in 199 '. i want to read you a bit of it. he is wrapping himself in the buffet flag in terms of his decision to go public, people, including, myself, have been highly critical of. warren says a director who sees something he doesn't like should attempt to dissuade other views. suppose, though, that the unhappy director can't get other directors to agree with him. he should then feel free to make his views known to the absentee owners, otherwise known as the public shareholders. directors seldom do that the temperment would be incompatible with critical behavior of that sort. i see nothing improper, assumeing the issues are serious. the director can expect a vigorous rebuttal, a prospect that should discourage the center from pursuing trivial or
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non-rational causes. >> is this trivial or not? i don't like how you are searching for a new ceo. or the people are you putting there. if you asked buffet would say to rise to this level you need something that would be akin to this decision to boy this company is a horrible decision or i think the idea of what we're doing in terms of signing off on finances that i don't agree with or i don't agree with the accounting standards, those are things that rosie to that level. this, i'm not sure, you have to ask buffet, himself. i don't know that that qualifies to this level. >> it's an interesting question. i don't know either. but he does believe, of course, that he did the right thing. as i said, he's wrapped himself of it if sort of a buffet flag of doing this. >> you can't go along on the board if you completely disagree and think it's a horrible idea. i don't know every single bump on the road. >> buff ed rarely, if ever, did that himself, of course. then complained and has talked about how difficult it is to go against the board, which is included in those comments.
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it's not an easy thing to do. it's fraud. there is all kind of unintended consequences. >> you have to wonder what is best for the company long term, we are not going to know for a year. >> i think it's interesting. i thought he might have tried to get more for stepping down. if you step down, you'd say i want x, y, z. >> how much leverage did he have after this whole episode? >> he may have had more leverage, having said that. >> they will not get the guy the moon, they gave him a board help. >> having say that, i think he believes, at least, by getting rid of the noise, putting himself on the sideline the company has a brighter future. >> we can't do anything with the stock at 13 and change. >> i imagine be i the way, if he sees things now as an outsider that he doesn't like, we might be hearing from him, too. >> he's a large shareholder. >> right. >> all right. let's switch goers here, literally. >> oh. >> i didn't think of that. the daytona international speedway complex is getting a
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$400 million makeover t. project is called daytona rising where the goal is to make the one-day-to-day tone na complex a year round destination with vast pro shops as one of the anchor stores, ceo of the speedway corporation joins us now with more. good morning, welcome. >> good morning. thanks for having me. >> so what's the idea behind this? keep draw business year round to a place where people generally come seasonally? have well, two fold, the track, daytona international speedway was built in 1959. we need to take it to a newer level with modern amenities. that's why we will put dollars into that. we have a surrounding development that is called one daytona, where bass pro shop lrks an armor tenant and retail and dining. it will give fans more to do. while there in daytona, it would extend their stay and provide year round business and economic impact. >> are you modeling this
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directly after patriot place up in foxboro mass, which bob kraft has done around that stadium where there is a bass pro anchor store and there is retail and it has become tremendous success. >> i think that's great example and i have visited the patriot place. i think they have done a terrific job. but that's an example of the type of destination we are planning on creating. >> how many different events can you have during the 84? who are your plans will? sample well, at the daytona international speedway, we are busy more than 300 days a year. i think that's surprising to people. we have all kind of events. not just nascar. we have motorcycle events, go carts and all kind of charity events. worry busy. >> how busy, though? there have been reports over the last several years that ticket sales are down, television ratings are down, have we stemmed that tide at all? >> i believe so. and the consumer confidence to me has really rebounded.
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we are seeing tick sales on the rise again. we did have some tough times as many businesses henceforth did have at that time. we feel like it is rising. the second thing is we just signed two new deals with nbc and with fox. >> you did? >> they were terrific deals. largest tv deals in the history of our company. so we feel like the time is right and that things are on the uptick. >> the competition that you have against all of these other major sports, whether the nfl, obviously, the big gorilla in the room, but everything, is it harder to compete against these other sports than it ever has been? >> well, that's one reason we are doing the daytona rising project, which is to not keep up but to raise the boar in motor sports and all of the motor sports facilities. it will be a total different level of experience you have seen in the past. it will be exciting. >> good luck. we are happy about the nbc part of the tv deal. >> really fun. >> thanks so much. >> thank you so much. >> when we come back, we do have
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more on the market coming up at the top of the hour, asset management bob done el will join us with managing director rebeck that patterson, up next, courtney reagan joins us on the j.c. penney resignation and "squawk box" will be right back. t to experience the precision handling of the lexus performance vehicles, .
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s. >> welcome back, everybody. joining us is brian nag el. joining us on the set is courtney reagan. brian, tell us what you think this members for the stock. we haven't seen huge reaction for j.c. penney, what does it portend for the future? >> one is a pretty big distraction for j.c. penney over the last few days. is probably a positive. i think the bigger negative is this question with bill ackman leaving, does he exit his position? could you have this overhang in the stock. he still owns about 18% of the company. >> he owns 18% of the company the stock is trading at $13.45. my guess is he's not going anywhere any time quickly. >> yeah, there was no mention of, a press release from j.c. penney, no mention of this. i just think that i guess watching retail for a while now. i think this could be kind of an
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ongoing concern, it could represent somewhat of a cloud over the stock. >> courtney, this is definitely the next leg down in what has been a continuing saga. it's difficult to think of all this happening while they're in the midst of back-to-school and the holiday shopping season. >> earnings next week. it will be the first full quarter they report with mike ullman back in the seat. will be interesting, lots of overhang in the stock, still, lots of negative questions, i think that still remain. there has been question about inventory. what does that look like, mr. ackman brought up in some of these letters, sort of uncomfortable at the amount of inventory they've committed. the merchandise, i come back to that. that is the base of this business. you have to get the consumer back in. all of these headlines about the board, it's fun to talk about. i think the consumer pays more attention to what's happening in the store. has to be set right. you have to get a unified voice i think to go forward in a positive way and get the changes
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the customer wants to see, they're not there yet. >> brian, i don't know if you have been in the stores, or you have seen people reacting to the merchandise that's there? any thoughts? >> i agree completely with courtney saying, this at the end of the day as a retailer, to me, what i have seen of the stores, there definitely have been improvements. some of the stores look much better today tan two years ago. it doesn't seem, it's difficult. i go to a few stores. it doesn't seem like customers are reacting positively yet to this new product. you see a lot of clearance in the stores. it brings traffic in. >> were those ron johnson's changes, by the way? are those changes being continued? >> many of them. many of them more. home store was sort of officially launched under ullman. all of that was ron johnson's vision, all of his products, his relationships with those home members. back-to-school is probably half-and-half, if we are honest.
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we are still a little unclear about the strategy with what mr. ullman is wanting to do here. >> the problem is, the people i talked to, including the most respected people in retail think ron johnson set them back three to four years minimum. mike ullman, there is little he can do. >> exactly, how much can he unwind, when he came in, what cards have he dealt? >> there is little an incoming ceo will be able do for a significant period of time. because of the setbacks that took place under ron johnson. >> you can't keep blowing through it. i think the other question, i will throw this to courtney or brian the situation with the suppliers, that was something that mike ullman was supposed to be shoring up. did the suppliers still feel good with where things stand today? >> it appears they do. i think that eases the strong point because of the relationship he had in the past, that being said, manied is not really his strong suit, he was brought into stabilize the ship financially, which i think he did. he stabilized it.
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but moving the nodal forward is the new question. you need to make sure those vendors stay with you. once one leaves, if you have an issue with the financing, that's when the domino effects starts. that's when it gets dangerous. >> courtney, brian, thank you very much. coming up, we will have more on bill ackman leaving the board of jc penney. take a look at futures, though, see how the market is setting itself up. the dow looks like it will open 53 points higher. we are coming right back with a big hour. .
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. >> breaking economic data, retail sales hit the tape 8:30 eastern. >> the oregon ducks unveiling their new football performance center. >> thank you very much, mr. ducksworth, quack, quack, quack, quack, mr. ducksworth, quack, quack, quack, quack. >> gordon, stop quacking. >> jane wells has the scoop on the $68 million facility funded largely by nike. >> elan musk detailing plans for the hyper loop. a new transit system that would travel at speeds bordering on ridiculous. >> we have to go right to, ludicrous speed. >> ludicrous speed? sir, we've never gone that fast
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before. >> i don't know if the ship can take it. >> what's the matter, colonel sanderings, chicken? >> phil lebeau will bring us details. >> my dreams are going into my feet. >> the third hour of "squawk box" starts right now. ♪ >> welcome back to "squawk box" him i'm becky quick. scott wapner is in for joe who is still on vacation. our guest hosts have shawn taylor the chairman and ceo of sfx concepts. we have been watching the futures this morning. so far, it looks like there are some green arrows. it looks like the dow futures are up. s&p are up by about 5 points. >> the big corporate story of the morning the shakeup at j.c. penney. news breaking earlier, investor
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bill ackman resigning from the board of directors as part of his res ig nation, ronald tysoe former executive at federated department stores, now macy's, will be joining the board as will another board member and political ackman telling cnbc in a conversation we had exclusively earlier by telephone that he felt very comfortable with what ultimately happened. he says, i elevated a bunch of issues that are critically important by making them public. we came to an agreement t. board will now fung more effectively, he says, without the noise of him being on that board, he says what he has done will focus the bird on all the right things, also on the issue of whether he is off the board, whether he will now sell shares. number he says, if you wanted to sell, i could have sold all along during the quarterly window t. other issue, now he's off the board is that because he has insider information as part of the board, there will be a period of time with which he can't sell his basis in that company, by the way, about $25,
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those shares trading now at about 13, so ostensibly would not sell. as we talked in the last hour, one thing bill ackman did tell us and pointed us to was a quote from a letter by warren buffet saying, really, talking about how board members should act and says that if an unhappy director can't get other directors to agree with him, he should feel free to make his views known to the absentee owners. the temperment of many directors would be, in fact, incompatible with critical behavior of that sort. i see nothing improper in such actions assuming the issues are serious, of course, in this circumstance, are they. >> do i they arise to that level. >> do that level. yes. >> let me ask you a question. >> yes, sir. >> was he thrown off the board or quit? how would you characterize it? >> that's a great question. >> i would arc you that he quit and the only reason i suggest this is i'm sure there were
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legal levers or suggestions that maybe what he didgy going public could have been illegal, though, or could have caused a civil suit, i wouldn't say legal. but i also think as a board member, he was voted to be there. the only way to really leave in this day an age is to resign and i think that he felt at some point that he had become so toxic. i imagine when he sent his original letter, he knew it would become quite toxic. >> of course. >> therefore, few, he was hoping to persuade the board to do something like maybe hire tysoe or get the company a position, by airing these issues publicly, forced the board's hand potentially on ullman or other decisions on what the management will ultimately look like. >> knowing that will cause him to exit, perhaps. that's still a little unknown, right? >> apparently, this has been in the works all weekend. i should say people close to the board suggest that ron tysoe, that discussion with him, has been long in the works and those
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people close to the board suggest that bill ackman had very little to do with that decision but, of course, did sign off as part of his decision. >> why was it in the works for some time? because the board recognized that they needed some new blood to try and help fix what was going on will? i don't know. >> you asked a good question. i don't know the answer. >> i mean, what does that suggest, in this whole discussion? >> it suggests they were looking for more people e people with retail experience, they will add ron tysoe and additional board members, they say, i highly qualify new directors, does that mean they have more experience? i didn't qualify as director. >> it means it's not an activist shareholder. >> exactly. >> we have j.p. morgan, retail analyst, matthew boss on the news line to help us make sense of all this you're initial thoughts when you heard the
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news. >> hey, good morning. initial thoughts i think from a longer term perspective, i think the positive is this opens the door for a potentially qualified new ceo. i think that no having, not working under the eye of an activist, such as pershing squares, bill ackman is a positive. some of the candidates who have been thrown around, brendan hoffman from bon ton, i have no knowledge that they were interested to begin with. i think it's a positive. the second positive, this disrupts, quells some of the disruption in the near term. the big question mark, though, remain, is how much damage has been done. we're going to get earnings next week on the 20th. i think we will get lackluster results. same store sales down high singles to low double digits with a significant gross margin slide, balance sheet not on good footing, with probably a billion-and-a-half dollar cash flow burn and probably looking
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at $2.5 billion of cash flow burn on the year, the question isn't what stage has this company been left. >> let me play devil's advocate. i have been critical. i think it creates a trust issue on the board. is it possible what he has done will ultimately create value for the company? >> i think he's raised some valid questions t. truth is, the company put a succession plan for a new ceo in place three weeks ago, according to their letter back. so the question is, what has this really changed in the grand scheme? i think what it probably does is create a greater sense of urgency. i think as we head into the second quarter, the second question is, how much do the second quarter results now matter? i think it all depends on the magnitudement i think magnitude will be the negative side. particularly, people will be focused on this balance sheet and trying to determine what kind of length of time at this
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rate of burn does this company have? i think that's the analysis that people will be doing next tuesday. >> what kind of strategy should this company pursue going forward? what sort of merchandising, retailing plan should they put in place? >> yeah, i mean, look, when mike ullman came on, you kind of seen both sides. you had ron johnson as far to the right as you can get, trying to basically remerchandise the company, upscale the customer. then you had mike ullman come on, who is essentially going back to basics, bringing back private label, trying to reconnect with the core customer of the past. though, i go es the answer may be something in the middle. i'd probably say, taking some of the quotes from bill's letters, actually, talking about bringing back inventory as aggressively as mike did. you know, maybe that's the one area that you can potentially fault him and we'll see what the inventory looks like out of the quarter, but, personally, going
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back to the lower price points, bringing back private label, increasing inventory to an extent, i'm not so sure what ceo ullman did here, i don't know what bad decisions he's made t. question is, how much damage was done and the length of time it's going to take to refwan the traffic. that's really going to dictate future of j.c. penney. >> matt, real quick, i don't know if there is a correlation or what you could say about this. do you think the customer of j.c. penney cares about this? do you think they paid attention to this? do you think at the end of the day it matters to the customers going into the stores or not going? >> i don't think it matters who the ceo of j.c. penney is to customers. i do think what they do hear is the questions about bankruptcy. i will tell you, i have been in stores. i have heard customers, you know, walking up to store associates and managers and asking, you know, is this store going bankrupt? i think the reason is, they're
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wondering, are they going to get a better deal? i think in terms of who the ceo, it's relative to the every day customer. i think the rumors and disruption is very bad, especially during the high volume times, which is back-to-school and into holiday. i think the most important thing is to stabilize the ship and move forward. >> the next step, he dooems deals with customers on a day-to-day basis. that's a difficult position to be in. >> matthew, thank you, for your perspective this morning. we present it very much. among the other stories we are following, young sales in china sliding more than expected in july, among the reasons, the heat, some analysts say the company's lack of cool drinks and ice cream meant a consumers looked elsewhere. they are troying to bounce back from the dum double impact of that food safety scare and shares of orbits dropping, par
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chal management said they want to diversify it's portfolio. firm has been an investor in orbitz since 2007. when we come back, elan musk unveiling the concept for the hyper loop. it's a high speed low cost transportation system. phil lebeau will bring us the details. first, a check on the markets, we will be talking to bob dohle and rebecca patterson right after this. especially today, as people are looking for more low,
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. >> welcome back to "squawk." eli lilly announcing positive results treating a kind of lung cancer. lily submits it to regulatory facilities before the end of 2014. let's get a check on the markets. economic data at 8:30 eastern time, joining us to discuss from rochester, new york, asset management, the keefe market strategist an rebecca patterson at the table. >> maybe he went to the pga championship. what is going on? are you a university of rochester person? did you grow up if rochester? what's the rochester connection?
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>> no, just here, seeing clients. that's what we're doing here. >> the old kodak town, anyway, let's tie to understand. we will get some data at 8:30, i'm going to you, sentence are you sitting right here. you just put out a note, talking about, what you call a leadership rotation going on in stocks, moving away from u.s. markets in terms of how people have moved into european stocks. is this a trend or is this just a weak? >> well, it's been a quarter so far, if you look at this quarter to date the s&p is up a little over 5% t. euro stock 50 is up 9%. europe is doing a lot better than the u.s. for a couple months now, not just a week. how much further can it go? is it discounted? i think we need to see it continue to be less bad numbers. it's all relative in europe. i would love to see, maybe it's not until after the german election. if we saw, i don't know if the election will be the catalyst.
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september 22nd, if after that we saw merck will being off on fiscal us a territory a touch, maybe the ecb feels a little more ability to ease, certainly they could, given their inflation mandate. if we got those sort of catalysts on top of improving growth, i think you could keep leading. >> bob, if you had money, would you put it in s&p 500 or europe? >> i'd certainly have it in equities in the near term, europe is probably given the news less bad will be more of a rally than the u.s. the u.s. has a lot of gains to digest and sideways action may digest it. >> john, why is the euro at 132 or 133, or wherever it is? does it deserve to be will? >> in many ways it doesn't deserve to be there. it shouldn't be there, it is there bus of strong trade blerngs all of those things, kind of force it up, right, on its own. >> how long is it going to last? >> well, it could last quite a
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long time. up with of the problems with this election this german election at the end of september is everybody is hoping that merck will be. >> assumeing she will win sample she will win. >> will she do anything with it? >> i think when we get the fed tapering, assuming we get tapering this fall, we see interest rates in the u.s. is that rt to edge higher again, then you could get some more dollar strength on that, that helps pull down the euro a bit. look what happened to the euro in may and june. it fell pretty dramatically. i don't think we see that repeated. i think risks are buys. >> expla enthe u.s. market. across the bottom of the screen, we say, what's moving the markets? sort of a good question. what do you think is moving what's happening? is it all worries about the taper? is that what this is all about? is it that the claims numbers in. >> no, i think we have an improving housing market t.
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trend continues. we have a labor market improving, slowly, it is improving. we have wealth effects from the stockmarket, helping consumer confidence, i think we will see that rethekt in retail sales today. we see a lot of buybacks. so the rise in equities so far this year is not just about the fed. will is a lot of variables, i think helping particularly with the multiples. i am worried. consensus is worried about september with a lot of event risks, medium, longer term, 12, 18 months, i'm with bob, i think we can see equity markets go higher still. >> what will move the markets? what's the catalyst that will take the market higher if one is to believe that it's going to go will? >> that's the right question. i think as rebecca said, there are a lot of fundamental also underpinning that strength we've already had, where do we go from here? in my view the next move up requires stronger revenue and earnings growth. i think we'll get it. the jury is out. that's not a done deal. we've had pretty sluggish
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revenue and earnings gains in the firk first two quarters this year. we need some more in order to have the market go higher. it seems to me, the p.e. move, which is pretty significant, is largely in the rear view mirror. fundamentals will now matter. >> one piece of data, i don't want to overemphsays one data point one that didn't get a lot of action is interesting the latest u.s. trade data report. our deficit is getting smaller, but within that report, you saw that u.s. exports to europe picked up a lot. you think about the multi-national nature of the u.s. stockmarket today. if europe does, if it can, fijerses crossed, continue to get less bad and there is more export demand that can help a lot of u.s. companies and that tail wind wasn't there a year ago. >> isn't the biggest argument for europe, though, valuation? because the less bad, it's less bad relative to itself, not to the united states the united states is much better, but, clearly, it's much more undervalued. the question is, is eight value trap or not, tow, right? >> i don't think so.
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i mean, we have seen price earnings, ratios move up quite lot. multiples moved up since last summer. i'd say from a valuation metric, whether you are looking at the discount to the u.s. or just versus itself, will is still value in europe. i do believe we need to see pmi's business sentiment continue to go higher from here, hopefully, some more support for growth, either from less us a territory or the ecb. could take us higher. if you don't get those things, we might give this all back very quickly. we're modestly overweight. we are overweight the u.s. we are keeping our big underwait to emerging markets mou. >> i would think have you to be more selective than ever in the types of stocks you are investing in europe i'm not sure you want to go out and put money into a european bank stock. maybe you'd feel differently. >> they feel well. >> they are performing, why, they were so deeply depressed. the fact of the matter is the
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survey came out. it was positive in germany. you look at germany, you can't see anything negative. you look at france, normally, there are all kind of problems. france is a heck of a big place, right? so there is a delicate balance going on there. >> since we're playing where in the world, would you put money in japan right now? >> we had been overweight last 84. we got underweight this spring, simply, the market moved so quickly. our portfolio managers said we're hitting our target. i do think there will be another opportunity to get in. we probably don't get much until i believe september or october the diet session, parliament session. we get new reforms push through i think they will be happy about that. you get a stronger dollar, weaker yen, u.s. momentum. i think japan can go higher. abe is risking his life. he may not succeed. he will go down ryeing. >> didn't we go down at find, are you long the nikkei, short
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the yen. >> absolutely. sab a samurai. he's got the wind behind him right now. and what people don't touk talk about all the time, he also has the old japan, they will re-arm the army. this gives him tremendous support that people aren'tiacing about, but, in fact, it drives a lot of people's thoughts. and just last night, he came out with an idea of a corporate tax cut. >> right. >> the stockmarket was up 2.5% t. yen was in the hole. all these things are wonderful, right? japan, we won't know for 18 months whether he will be successful or not. be you the man is doing the right things. you got to go with him. >> john, thank you. rebecca, thank you. bob in rochester, say hi to the dlients for us. thank you. coming up, we will give you the inside scoop, phil lebeau will join us with more details. and we got breaking economic data. we will get retail sales at import/export prices in a couple minutes. we are coming right back.
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. >> welcome back, everybody, elan musk unveiling plans for a $10 billion hydroloop transportation system. phil lebeau joins us from chicago on this incredible story. >> i think what booem people are interesting is in one, would they do that, two, would it actually work? here's his vision. essentially the hyper loop are
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two parallel tubes. you'd be riding in capsules. they can seat up to 2008 people. you would riding, essentially glideing on air cusions once you got up to speed. by the way the top speed one year in these capsules would be up to 800 miles per hour, that's if all the conditions are perfect and are you going on the straight away t. hyper loop g-force would be comparable to what are you on an airplane. here's him explaining what he feel what is the ride would be like. >> it would be initial acceleration, once you were at the speed, you wouldn't notice the speed, it would be extremely smooth like you were riding on a cushion of air really. >> so how would they propel these tubes or capsules down this tube? this is one drawing. you see the solar panels, one tube going one direction. the example that they used yesterday if releasing the hyper loop was a trip between l.a. and
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san francisco. they say if you get the capsule up to 800 miles per hour, a trip could happen in 30 minutes. elon musk estimates the california hyper loop building it would cost just $6 billion. that's gotten a number of people saying, wait a second, that seems incredibly low in terms of getting something back in a minute like this. musk says he might, he might build a hyper loop prototype. would people ride it? here's what a few people in california had to say yesterday. >> the concept is right. it's a good idea. i would take that all the time. but where is the money going to come from? >> i love elon musk. i think he's a genius. i would go with what he's doing. i definitely would. it sounds so cool. >> definitely technology, a little fear in apprehension, for travelers, this train gets you there fast ev, more comfortably, it's something that is good for everybody. i would definitely ride it after it's taken a few test drives.
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>> well the hyper loop is getting a lot of attention. investors are clearly more focused for now on tesla, fluctuating between that 145, 153 range. up in the last year. one last thing, becky. i mentioned this morning, would you ride on this? you said i'm not sure if i would get sick what would happen? yes. that's what you said. you might puke. you foe what a lot of people said to me? yes. >> they want me to ride in the back? >> no, a, can i get up and walk around. i said, no, it's a tube. they said, where is the bathroom? the primary concern of people i have been talking with. >> i can see. that although, we were laughing with the people you had been interviewing, we were agreeing, really great, interesting concept. i love the idea. you go first. >> right. >> it's a short ride. you might be able to hold zblit for 30 minutes. >> yes. thank you. stick around. >> you got diapers. have a whole new business.
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>> with more on this is rod deredeevenl we should point out he's worked on many projects, many on the transit and the environment. thank you for joining us. >> thank you, becky. >> so what do you think, a, it possible, b, how quickly could we see something like this? >> i think there is 84-a. is that it's needed. in california, we have such serious gridlock and climate change is so serious, we need to have something that operates off of freeways and is sustainable. so we need something like that and elon has the helptation for delivering the impossible. we should be encouraged. the problem is we have to have an operating prototype before we can identify the actual cost of development, whether it operates
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effectively and safely and is veermtally attractive. so the next step, if he's really in this game, is to develop a truly operational prototype that can be compared with the other modes in the world. >> unfortunately, we have economic data that rick has for us. we will thank you, ron, we appreciate it. rick, what do you got? >> all right. july retail sales, well, if you just look at the headline, it's oup up .2. now we go through the ordeal, let's take out autos, it's up .5, obviously they contributed. autos and gas up .4. so we see auto, transportation, will be areas to pay attention to. they have a metric called the control group. that's up half of 1%. so pretty much these numbers match expectations, but if you take a step back and you look at things historically, you know, they're a bit light. they do match expectations. if you look at import prices and other data series that we're
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receiving, it was up much less than expected. we were looking for a number close to up 1%. it was only up .2 of 1%. that's month over month. we take that import price index on a year over year, it was up 1%, which is less than a 1.5 we were looking for. so, overall, i would think that retail sales pass the mustard test for the lower bar based on expectations. as we look around the world and see better numbers, i think the whisper number here was it's stronger than the reality. we're at a 267 yield. we're only about a half a dozen basis points away from retesting that 274 yield close on the 5th of july, which exhibited a two-year high. back to you. >> okay. thank you, rick. for more on the data, we got steve liesman at the table. >> a mixed back here, autos were down more than expected 1.1, furniture down 1.4, that's a number if the housing market was doing better, you'd expect it
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was up 2.5%. electronics down a bit. then have you things like clothing, sporting goods, general merchandise, department stores up pretty healthy from a half to a full point. we've looking for here, the thing that matters the help from the consumer the concern whether or not the tax hikes earlier this year the sequester hurting the consume were. the consumer seems okay here. ly guess when i get off set, i see the guys to'ing the forecast, they run about 2%, maybe 1.8%, which is about in line with last quarter. not that healthy, not that bad, either, if you consider that we were concerned about a much steeper decline. >> john, can i put you on the spot, do have you views on this? >> yeah,i'm disappointed. i expected more kick coming here. there's been, we might be worried about the sequestration and the tax hikes. those happened a while ago. we should be over them. >> from what, john?
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that's the question a lot of economists are asking what are the sources of demand, if deficit is coming down, you have the tax hike earlier this year, and you have relatively, you don't have the kick to income that you'd expect from job growth, what is the source of demand? i had a lot of concern from economists riding the last couple days. >> there is no doubt about it. there doesn't seem to be anything but mood that ought to be doing this, right? i believe the mood is relatively important here. >> you need some wages. we all know that has not happened. >> there's the tax hike, this is not updated. this is through june. can you see that decline in disposable income in january. you can see, we've never had a pop from that level. we've maintained relatively modest gains since then. so a question as to the source office where growth will come from, corporate earnings doing okay. if you will have the fed reduce its stimulus, what you want, you want the growth to come in its
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place. there is some doubt about what the source of that will be. >> rick, you think it's enough, relatively speaking? are you with steve here? >> well, i think that the footballs are what the numbers are. my first observation would be if you took the last seven years of data and you put all the important data points on a chart, i really doubt if anybody would notice, for example, the sequester or even some of the tax issues at the end of the laugh year, which makes me doubt that it's anything we should pay close attention to. i do think the one area we can point to, we do see some benefits, and that, of course, is in the dropping deficits. but we have to see what the federal government fiscal year looks like, because we pulled so much tax ref now forward. >> rick, i don't want to -- >> hey, guys. >> tell me where the benefits are. i'm still looking for an economist who shows us greater than, smaller than expected deficit and that increases gdp as a result of that. i'm not seeing the benefits of the lower deficit.
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>> oh, no, no, no, i think you are right. i think we need to advocate to shoot for $25 trillion debt to see how many benefits we can extoll on the economy. >> the economy is not bigged a assertive rick, which is what you did. i'm saying if you keep things level at a time when you struggle for demand. >> what is your question to keep things level? take from taxpayer a to give to taxpayer b through government spending? that's going to create final demand? it's worked so well, hasn't it? the unemployment rate is still close to 14%, is it not? >> it's not deficit spending. >> what do we do, dig it up from the ground, it comes from a spring of money. >> i will buy both of you lunch, i will thank both of you. >> maybe drinks? >> drinks at lunch. >> that's the point that is what was supposed to happen.
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>> i have deep respect for the arguments of rick santelli. i just disagree. when we come back, bill ackman stepping down from the board of directors. and another interesting story for you. you are looking at nike co-founder phil knight's parking spot at the university performance center. jane wells has more on the $68 million facility. [ kitt ] you know what's impressive? a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is,
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. >> back to "squawk," pershing square activist bill ackman resigning from the bird of directors. at the same, the board announcing ronald tysoe, former viets chairman at federated, now macy's, is going to be joining that board. this is big news given the role of bill ackman, his stake in the company. we should say he will hold on to those shares some period of time, considering he is still an insider. he bought those shares at about $25. you can see those shares trading at $13.34 in the premarket up a little over 1%. another story we are following closely this morning. 100 foot sink hole has swallowed up about a third of a resort
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outside of disney world. guests had 10 to 15 minutes to escape. these collapsing buildings have the summer bay resort. no one was injured. one building suffered catastrophic destruction. who neighboring ones are being evaluated for possible damage and perhaps structural integrity. all right, coming up, look at those images. the university of nike, that itself tongue in cheek name given to the university of oregon as a result of nike co-founder phil knight's sponsorship of the oregon duck's football program. jane wells got a look at the program's new $68 million football performance center and she is going to join us next. eno the gulf, bp had two big goals: help the gulf recover and learn from what happened .
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. >> welcome back. the university of oregon unveiling its new performance center. jane wells is there with more. i can't wait to see this. i've heard it's amazing. >> scott, are you not going to believe it. i'm inside a wait room that will make nfl players drool. the weight room alone is 25,000 square feet t. floors are so tough, they're made of brazilian wood. they can bend nails. so if money can buy you a championshipth in and the pressure is on the university of oregon. in this facility, money has been no object. let show you the picture. no detail too small. no material too out of reach for the football performance center paid for by nike koe founder fig
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knight and player penny, whether it's hand made rugs from nepal complete with custom foosball tables with oregon ducks or the over the top locker room, check it out, bacteria resistant surfaces where your shoulder pads and helmets go down the coach's hot tub, hydrotherapy pool t. war room with the 32-foot long table, 500 pound rug. nicknamed area 51 or the auditorium. with 170 seats made of ferrari leather. each capable of holding won swaeing 500 pounds, incredible artwork throughout. all this united the facility called by some the duck star. here's how i'm told the deal worked. the land for the facility was leased by the university of oregon to phil knight's foundation. he fntsed the building, donated it back to the university.
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now this state owned school is selling nameing opportunities to finance the maintenance of it. the ducks are ranked anywhere from 2nd to 4th in preseason polls. the school is dealing with relatively light penalties for recruiting violation. they have a new head coach. as you see them practicing on some of their three new practice fields. is this enough to help them finally win the bcs championship? if recruitings is an arm's race, guys this is a nuclear weapon, we will be here all day. we will talk to the a.d. the star coach the star quarterback and the duck, yes, scott the duck will be joining us as we talk about the business of college football. >> we'll be most looking forward to the duck and you, jane. >> i have one question. what is the economic health of the school right now? >> it's a state-owned school and the thing about this, and so the school is oregon is doing relatively well, but this facility is really the economic
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engine for the football program, which is the economic engine for the university as it is at most schools. and this facility the whole point about the way they did the deal is it basically came to them grat is is to make it alon a cash flow wash in terms of that. >> it probably will be. football is a rain-maker as jane said. i don't have any problem with this. the guy paid for it, himself. >> i am curious what the maintenance costs are to keep it going. >> is there any endowment for that? >> no, that's what they're selling nameing opportunities for. there are people to pay for the power the water. yeah. it's a fun day. the most glamorous thing in the world to see. i paid for the sewage and the garbage. you know, they're raising money for it. >> jane, you got to step up.
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>> no, no, honey, no, no, no, no, no, this is not my school. i'm in enemy territory. >> very nice. your school is going to have to keep up with this, though, right, you talk about the arm's race in. >> believe me, this is the beginning. when alabama hears about this, watch out. yeah, this is just the beginning. it has set the new bar. this won't be the last place this is happening. imagine what happens to oklahoma state. >> 250 tvs. 100 tvs maybe. >> aren't these people in the business of education? >> the school's reputation is an educational experience. >> if you just spent $68 million endowing, you know, professorships. >> we spent a lot of money at the school. it's a lot more than -- >> look, phil nooifth has been spending money at the school all throughout. >> quack quack. okay.
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>> jane, thank you. we will see you throughout the day. >> when we come back, is the stockmarket entering no man's land? jim cramer will tell us why the lack of the leadership in the market could put the rally in jeopardy. we will head down to the new york stock exchange right after this. here at fidelity, we give you the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. now get 200 free trades when you open an account. it's been that way since the day you met.
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welcome back to "squawk b box", everybody. the futures are indicated higher and they are up but not as strong as earlier. and the dow is up 33 points and the s&p up by 33.3. jim, i know you have been talking about on "mad money" how you are concerned about the lack of leadership in the market, and what is that telling you? we could be reaching a stalling out point? >> i think that -- yes, that is great way to put it. tech has lost any pizazz other than tell cecom and there is ci maybe wednesday night.
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and re-fi is not that great and no pickup in the construction loans, and autos are a bright spot, but i'm looking for the bright spots, and i don't see it in housing. there are not enough good companies right now to do enough so that i feel that we can go dramatically higher. >> jimmy, did you see the performance center up there at the university of oregon that your guy chip kelly left behind? >> well, i spent two fridays with chip and i think that the nova care center will match that. i think that the -- it is interesting to see that the ducks left -- this is a chip facility, and you needed chip to be able to take advantage of it and what we are speaking about is of course the new eagle's coach, and chip kelly could use some of the wide receivers that the ducks have. >> and the facilities are better and the players are better, and come on, jim. >> ouch. >> that is tough, man. >> i have to tell you that when i saw chip, the amazing thing about him unlike andy reid, he comes over to say, thank you for
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being a season ticket holder and i don't know who is going to start for quarterback. one thing that you knew is that andy reid was etched in stone, but everything is up in the air with chip. >> i thought you guys looked good and you will be good. >> well, it is tough to see, because they were not hitting. it is tough to see who tackles when you don't tackle. >> and jim, are you buy jcpenney? >> well, rg3 does not start until game five. sorry, scott. >> i disagree. >> and with ackman, i would set up a separate fund and raise a couple of billion and then buy a lot of stuff at jcpenney, because in the end, that is what matters. >> go redskins. >> oh, yeah. >> i have an ally next to me. >> yeah, the redskins are number one. >> he should go buy a team, and then we would like him more probab probably. >> jim, see you in a few minutes. >> thank you. and coming up the guest hosts all morning have been john taylor and andy, and we will
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give them the last word when "squawk box" continues. the stock of the day comes up. you are watching "squawk box" on cnbc, first in business worldwide. right now, 7 years of music is being streamed.
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as if there was any question as to what the stock of the day is, there it is, jcpenney up nearly 2% premarket, and the hedge fund manager big ackman resigning from the retailers board. let's go to geontjohn taylor an for the last word. >> i wonder if jcpenney can right the ship in terms of having a sustainable business and i wonder, two, if europe is sustainable as well. >> when you say does jcpenney have a sustainable biz usinesbu does that mean -- >> toast, you mean. >> b as in billions or the other word b? >> well, toast is a possibility, right. it is terrible to say that, but you know, it is not a healthy thriving place. >> and you don't think that europe is sustainable? >> well, europe is going to be exist, but the question is, is the rally sustainable. >> perfect segue to john.
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>> well, europe is toast, and maybe the euro is toast in the long term, but the problem is that in the long term, we are all dead and the euro is, too. but getting to the shorter term, the u.s. is really the best house on a bad block, and the bad block includes japan, china, europe, and the u.s. is the best looking place, and on the other hand, the dollar is not acting well. >> and when do the currency traders figure that out? >> i argue that in the next six years the dollar is stronger, but tomorrow, jesus, who knows, it could be anything. >> would you surprise a violent reaction to the fed if they decide to taper in mark, or has the market baked in some it? >> i don't think that there is a reaction at all, because for start, the u.s. treasury does not need as much money, because the deficit is down and why do they need $85 billion a month and the housing market, does it need that much money, too?
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i didn't think that tapering is going to be a big issue when we get to doing it, and everybody will go ho-hum. >> yeah, things are better than people realize. >> yes. >> and things are really. >> and you think that the market is going to do a ho-hum? >> well, the big crisis was in may and june when they said that they are changing. >> and we have had plenty of lead-up, and it is when it happens. >> you look at the historical precedents like 1994 which is the closest parallel. >> and hasn't the last several days in the mafshgt, and ending the six weeks of gains, hasn't that told you that the market is not ready? >> is that the reason that the market stalled or the fact that there is no earnings growth? >> well, i think that people are hoping that it is pushed off to december and when they realize that it may be in september, it is going to be a tantrum again. >> and maybe we have a little tantr tantrum, and that is why we are worried about the market until september, but the fact of the matter is that when it happens, everybody is going to say, where is the impact, and they won't
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find it. >> john, thank you for joining us. john taylor and andy sseywer. >>ly be on "squawk on the street" for a couple of days so all of this sleep will not be needed. >> thank you for joining us. now it is time for "squawk on the street." good morning and welcome to "squawk on the street." i'm david faber with jim cramer live from the new york stock exchange and our partner carl quintanilla is off. retail sales growth came in slightly lower than forecast came in, and now over to japan, and because the nikkei is on the

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